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Economy in Brief

FIBER: Industrial Commodity Prices Continue to Rise
by Tom Moeller  March 14, 2016

Recent improvement in factory sector production has strengthened industrial commodity prices. The industrial price index from the Foundation for International Business and Economic Research (FIBER) increased 3.7% during the last four weeks. Nevertheless, prices remained down 8.4% during the past year as worldwide factory output remained under pressure.

Within the sector groupings of prices, the FIBER indexes showed gains for most products. In the crude oil & benzene area, the cost of WTI crude oil jumped to $37.37 per barrel last week, up 30.0% in from the cycle low four weeks ago. Prices for the petro-chemical benzene also strengthened 11.6% last month, but remained down 13.5% y/y. In the metals sector, copper scrap prices improved 8.8%, but remained off 14.8% y/y. Aluminum prices also bounced 5.2% higher (-10.1% y/). Steel scrap prices continued to fall, however, by 1.2% last month and by roughly one-quarter y/y. In the miscellaneous price grouping, natural rubber prices jumped 17.1% m/m and were up roughly one-quarter from the January low. Framing lumber prices also showed strength and improved 2.3% m/m. Prices for structural panels similarly gained 1.5% m/m, but were 7.2% lower than a year earlier. Prices in the textile sector have shown little strength. Cotton prices declined 4.5% m/m and were down 6.8% y/y. On the strong-side have been burlap prices, up roughly one-third y/y.

Overall, commodity prices could improve further. The current industrial output projection from the National Association for Business Economics calls for 2.2% U.S. production growth in 2016, up from 1.5% growth in 2015. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in industrial output.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.

FIBER Industrial Materials Price Index (1990=100) 1-Mth % 3-Mth % 6-Mth % 12-Mth % 2015 % 2014 % 2013 %
All Items 3.7 4.1 -2.1 -8.4 -16.3 -10.0 -2.9
 Textiles -1.5 -11.9 0.1 0.8 2.2 -4.2 0.4
  Cotton (cents per pound) -4.5 -1.0 -8.3 -6.8 2.6 -24.2 10.8
 Metals 3.4 10.4 -4.1 -12.3 -27.8 -8.7 -3.5
  Aluminum ($ per metric ton) 5.2 6.3 -1.5 -10.1 -19.2 9.4 -15.8
  Copper Scrap (cents per pound) 8.8 7.7 -6.7 -14.8 -27.0 -12.0 -6.8
  Steel Scrap ($ per ton) -1.2 18.3 -21.5 -27.0 -53.8 -18.6 8.4
 Crude Oil & Benzene 12.6 -2.1 -6.4 -12.1 -19.4 -26.5 0.8
  Crude Oil (WTI, $ per Barrel) 30.0 -0.9 -17.1 -23.2 -35.8 -43.2 10.3
 Miscellaneous 4.2 6.5 0.1 -10.3 -18.0 -6.7 -6.8
  Framing Lumber ($ per 1000 board ft.) 2.3 1.3 6.0 -7.3 -16.4 -1.6 3.5
  Natural Rubber (cents per pound) 17.1 13.4 9.2 -11.5 -22.5 -32.3 -9.8
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